Best Billing Practices

Every industry has unique billing/payment issues. The publishing industry is no exception. In an attempt to set a standard for reasonable billing practices, the Magazine Publishers of America (MPA) set about to develop a Best Billing Practices Paper. Let me start out by telling you that this attempt did not make the publishers very popular with their customers—the large advertisers and the agencies that represent the advertisers. So, what seems like a very sensible project quickly turned controversial. Before casting stones at the agencies, it is necessary to understand their predicament. The following three problems only exacerbated the billing/payment issue:

1. Corporate payment stretching policies currently being used by many companies—including many advertisers who delayed paying their agencies

2. The agencies were then caught in a bind, not being able to pay the publishers until they had been paid by the advertisers.

3. Disputes

Publishers complained that frequently agencies would hold on to large payments when the disputed item was only a fraction of the total invoice.Was the dispute simply a ploy to avoid paying? To address the various problems, the Media Credit Association, a branch of the MPA, developed a draft proposal for industry best practices as they relate to billing and payment issues. Although the final paper was never formally adopted, you can learn from the Association’s proposal and adopt its provisions in your own practices.

For those not familiar with the publishing industry, note that many publishers provide tear sheets of actual ads so the advertiser can verify that the advertisement actually ran. Can you imagine what a nightmare this can be for large publishers? Here is the MPA’s proposal:

• Supply advertisers with either a complimentary copy or an affidavit to verify fulfillment. Ideally, as technology advances, digital images of advertisements could be used to verify fulfillment.

• Invoices will be prepared promptly and disputes communicated immediately—not after the payment is due.

• Payment terms are binding unless a deviation is agreed to in writing.

• Undisputed amounts will be paid in the agreed-upon time frame. Disputed amounts will be resolved quickly.

• The publisher has the right to notify the advertiser if the agency is more than five days late in paying the publisher. Agencies are not thrilled with this clause.

• Agree that old rates will be used while new contracts are being negotiated.

You can adopt some of the MPA’s suggested best practices into your own billing procedures. Additionally, you should review your own industry peculiarities and find ways to incorporate these requirements into the invoice.